OK Guys, seems like I have resolved PART 1 of the issue myself.
Apparently the error logs go to this location - C:\Program Files\Windows Small Business Server\Logs\FaxCW.log
Upon investigating I found out that the error is as listed in the CODE SNIPPET below.
I looked for the user called FAX_MAILER_67702 in AD Users and Computers and enabled it. Reran the CONFIGURE FAX SERVICE WIZARD and got all green ticks.
However the XP Client still is having the same problem. Investigating that at the moment.
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by: manav08Posted on 2009-09-01 at 00:17:03ID: 25229147
Sorry forgot to include the bit when you click on "View Error Details"
Screenshot of error on SBS 2008 when tried to configure fax service